Court File and Parties

Court File No.: CV-21-00060030 Date: 2024-10-15 Ontario Superior Court of Justice

Between: Peter Drury and Patricia Drury, Plaintiffs

And: Doug Widdicombe, Max Wright Real Estate Corporation operating as Sotheby’s International Realty Canada, Grant Charles Westcott and Mary Carolyn Hurst, Defendants

Counsel

R. Mathew, for the Plaintiffs J. Juda, for the Defendants Doug Widdicombe and Max Wright Real Estate Corporation

Heard

October 10, 2024

Judge

The Honourable Justice J. R. Henderson

Endorsement on Motion

[1] The plaintiffs bring this motion for leave to amend the statement of claim and to add Jaclyn Drury and Dimitri Beline (the “proposed plaintiffs”) as party plaintiffs. I will refer to the defendants Doug Widdicombe and Max Wright Real Estate Corporation collectively as “the defendants” as they are the only defendants remaining in the action.

[2] The defendants oppose the plaintiffs’ request to add the proposed plaintiffs to the action, and they oppose the requested amendments that relate to the proposed plaintiffs. Otherwise, the defendants agree to the amendments requested by the plaintiffs.

[3] The background to the motion is that the plaintiffs purchased a property on Haist Street, Fonthill, Ontario (the “Haist Street property”), from the defendants Westcott and Hurst in April 2019. The defendants acted as the real estate agent for both the vendors and the purchasers in that transaction.

[4] After the transaction closed, the plaintiffs became aware of significant problems at the Haist Street property. The plaintiffs allege that the defendants had made misrepresentations about the property and had breached their fiduciary duty to the plaintiffs. They claim that the misconduct of the defendants caused them to suffer financial damages. In particular, the plaintiffs allege that the Haist Street property needed extensive remedial work.

[5] In 2023, the plaintiffs transferred ownership of the Haist Street property to the proposed plaintiffs, who are respectively the plaintiffs’ daughter and son-in-law. The proposed plaintiffs are currently the legal owners of the Haist Street property. The proposed plaintiffs have undertaken the remedial work at the property.

[6] The plaintiffs submit that the proposed plaintiffs are necessary parties to the action, that the addition of the proposed plaintiffs to the action would not be prejudicial to the defendants, and that the plaintiffs’ cause of action has been assigned by the plaintiffs to the proposed plaintiffs.

[7] In my view, the plaintiffs’ request to add the proposed plaintiffs turns on the question of whether the plaintiffs have assigned their cause of action against the defendants to the proposed plaintiffs. Counsel for the plaintiffs acknowledges that the proposed plaintiffs do not have a direct cause of action against the defendants, and that there is no new cause of action.

[8] The plaintiffs rely in part on the decision in Gentra Canada Investments Inc. v. Lipson, 2011 ONCA 331, 106 O.R. (3d) 261. At para. 36 of that decision, the Court of Appeal found that a cause of action in tort could be assigned to a third party in certain cases, and that the third party in those cases would be permitted to proceed against the defendants if it was fair and just in all of the circumstances.

[9] However, the difficulty for the plaintiffs in the present case is that there is no evidence that the cause of action held by the plaintiffs was assigned to the proposed plaintiffs.

[10] In support of the motion, Peter Drury (“Peter”) swore an affidavit on which he was cross-examined. There is nothing in Peter’s affidavit to state that the plaintiffs’ cause of action was assigned to the proposed plaintiffs. Further, on cross-examination, Peter did not state that the cause of action had been assigned. His evidence was that the discussions about transferring title to the property were casual and vague. At best, Peter’s evidence is that the proposed plaintiffs agreed to manage the outstanding remedial work at the Haist Street property.

[11] The plaintiffs also rely on rule 5.04(2) of the Rules of Civil Procedure which allows this court to add a party at any stage, on such terms as are just, unless prejudice would result. However, this rule does not mean that any person who might have an indirect interest or concern about the outcome of the case should be added as a party. Rule 5.04 is a remedial rule, the purpose of which is to allow for corrections where the pleadings do not comply with the general rule set out in rule 5.03(1).

[12] Rule 5.03(1) of the Rules of Civil Procedure reads, “Every person whose presence is necessary to enable the court to adjudicate effectively and completely on the issues in a proceeding shall be joined as a party to the proceeding.”

[13] Therefore, a person should only be added as a plaintiff if that person is a necessary party to the action. In making that determination, it is important to consider whether the proposed party would be affected or prejudiced by the decision of the court and whether that person has a right to be heard by the court.

[14] I find that, in the present case, the proposed plaintiffs are not necessary parties to this action. I find that the proposed plaintiffs do not have a direct cause of action against the defendants, and there is no evidence that the proposed plaintiffs have taken an assignment of the plaintiffs’ cause of action. The decision of the court with respect to the validity of the plaintiffs’ cause of action against the defendants will not affect or cause any prejudice to the proposed plaintiffs, and the proposed plaintiffs have no right to be heard.

[15] Moreover, as discussed in Globalnet Management Solutions Inc. v. Cornerstone CBS Building Solutions Ltd., 2018 BCCA 303, at para. 71, the plaintiffs’ claim against the defendants in these circumstances would not be extinguished by a non-arm’s length transfer of the property.

[16] Conversely, given that the proposed plaintiffs do not have a cause of action against the defendants, and the proposed plaintiffs have not taken an assignment of such a cause of action, it would be highly prejudicial to the defendants if the proposed plaintiffs were added as parties.

[17] For these reasons, I dismiss the plaintiffs’ request for leave to add the proposed plaintiffs as parties to the action, and I dismiss the request for leave to make the related amendments to the statement of claim.

[18] Therefore, it is hereby ordered that the plaintiffs shall have leave to amend the statement of claim as requested in the notice of motion, except for the addition of the proposed plaintiffs as parties and the amendments requested at para. 6 and in paras. 75-83 of the draft amended statement of claim.

[19] I order costs payable by the plaintiffs to the defendants fixed at $4,000 all-inclusive, payable at the conclusion of this court action.

J. R. Henderson J. Date released: October 15, 2024